As Open Banking Is Implemented Across Europe, Improving Product Agility Is Now a Priority for 51% of European Banks

LONDON, United Kingdom – January 22, 2019 – PSD2 and GDPR are making their presence felt in Europe. As a result European banks are prioritizing how they respond to changing customer behavior and demands (56%), new technologies (49%) and regulatory fines (46%), according to an in-depth study released today by Temenos (SIX: TEMN), the banking software company.

Survey respondents are primarily focused on opening services to third-party developers and maintaining own product offerings while becoming an aggregator (both cited by 55% of respondents)

The report, written by the Economist Intelligence Unit (EIU) on behalf of Temenos, explores the theme: “Whose customer are you? The reality of digital banking in Europe“. This regional report derives from the global report conducted for Temenos by the EIU, and examines in-depth Europe’s retail banking environment. European bankers’ top strategic priorities are developing their digital engagement strategies (cited by 43% of respondents) and improving product agility (51%). And in this new world of open banking, it is clear that retail banks need to build rich functionality in their apps if they want to avoid becoming only product manufacturers and suppliers of balance and transaction data.

Renée Friedman, editor of the report from the Economist Intelligence Unit, said:

“European banks need to quickly adjust to the realities of open banking if they are to remain truly competitive. They also need to find ways to better use the data they have amassed.”

Steen Jensen, Managing Director – Europe at Temenos, said:

“We are facing a once in a generation shift in banking, with fintechs, challenger banks and big techs challenging the way business is done in our industry. With open banking now a regulatory mandate, it’s no surprise that 51% of respondents are making it a priority to improve product agility in order to respond to the changing market. Banks must invest in technology that will empower them with a modern, agile, secure and robust platform to not only survive, but be nimble and thrive in an industry in flux.”

Key report highlights:

Retail banks across Europe are focusing their digital investment on cyber security (81% vs 71% globally) and individual delivery capabilities, such as through internet and mobile channels (53%).

European retail bankers think the most valuable use for AI will be in customer fraud detection (25%) and improving the using experience through greater customer personalization capabilities (22%).

European bankers see the biggest impact coming from payment players (61%) and technology and e-commerce disruptors (35%).

Respondents expect new entrants to gain the most market share in the payments space (62%) and savings and deposits (43%).

About the survey

The Economist Intelligence Unit surveyed 400 global banking executives about the challenges retail banks expect to face between now and 2020, and the strategies they are deploying in response. Fifty-one percent of respondents were at C-Suite level and 10% were board members. The European report was based on 65 respondents from across Europe and was supplemented with in-depth interviews with senior executives from leading regional banks.

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